Open Pilbara railways to Fortescue: NCC

By Chalpat Sonti

A Federal Government advisory body has recommended that three key privately-owned Pilbara railways be opened up to Andrew Forrest's Fortescue Metals Group.

The National Competition Council says the Robe, Hamersley and Goldsworthy rail lines should be opened up to boost competition in minerals exports.

Robe and Hamersley are owned by Rio Tinto, while Goldsworthy belongs to BHP Billiton.

It followed an application by a Fortescue subsidiary for access to the rail lines. The company wants the Pilbara railways opened up so it can also offer haulage services to any iron ore or metals producer who wants to use them.

The lack of competing rail infrastructure in the Pilbara has been a major sticking point in the development of other iron ore producers, who would otherwise struggle to get their product to ships.

A Fortescue spokesman said the company was pleased with the recommendation but recognised that the final decision lay with Treasurer Wayne Swan.

But Rio Tinto iron ore chief executive Sam Walsh said the decision, if accepted, could end up costing up to $30 billion in the next 20 years. It would create ''infrastructure chaos''similar to that experienced by the coal industry in the Eastern States.

''Its effect on future investment decisions would be equally wealth-destructive,'' he said.

Mr Swan has 60 days to decide whether or not to accept the NCC recommendation.

It made a similar recommendation about BHP's Mt Newman rail line in 2006, but that was not accepted by then-treasurer Peter Costello, who instead told BHP to negotiate a haulage system.

While Fortescue is still fighting for open access to the Mt Newman line through the courts, the WA Government has released haulage proposals for public comment.

Under a haulage system, the owner of the railway would still transport the iron ore and could charge the producer for both the cost of haulage and any associated infrastructure that needed to be built. The producer would still need to provide port and other storage facilities.

The NCC said opening up the Robe, Hamersley and Goldsworthy lines would promote competition in the Pilbara rail haulage and tenements markets, would avoid unnecessary duplication of infrastructure and would be in the national interest.

It rejected arguments from BHP and Rio that open access would be against the public interest.

Fortescue has had to build its own railway line between its Cloud Break mine and Port Hedland.